Cargojet Announces Redemption Of 4.65% Convertible Unsecured Subordinated Debentures

31/10/2019 15:00

MISSISSAUGA, ON , Oct. 31, 2019 /CNW/ - Cargojet Inc. ("Cargojet" or the "Corporation") (TSX: CJT) announced today that on December 31, 2019 (the "Redemption Date") it intends to redeem in full (the "Redemption") all of its then-outstanding 4.65% convertible unsecured subordinated debentures due December 31, 2021 (the "Debentures") in accordance with the provisions of the indenture dated as of September 15, 2016 (the "Indenture") between the Corporation and Computershare Trust Company of Canada (the "Trustee").

The Redemption is part of Cargojet's ongoing strategy to strengthen its balance sheet, improve cashflows and grow earnings. Cargojet is exercising its right to effect the Redemption at the earliest date allowed under the terms of the Indenture. The Corporation expects that the Redemption will improve its total debt leverage of approximately 4.7 to 4.0 times Adjusted EBITDAR (a non-IFRS measure) on a trailing twelve-month pro forma basis.

The redemption price for the Debentures will be 100% of the aggregate outstanding principal amount ("Redemption Price"), together with accrued and unpaid interest up to, but excluding, the Redemption Date. In accordance with the Indenture, the Company intends to elect to satisfy its obligation to pay the Redemption Price by issuing to Debenture holders common and variable voting shares (the "Voting Shares") in the capital of the Corporation and to pay all accrued and unpaid interest up to, but excluding, the Redemption Date, in cash. The number of Voting Shares delivered will be determined by dividing the Redemption Price by 95% of the then Current Market Price (as defined in the Indenture) of the Voting Shares on the Redemption Date in accordance with the terms of the Indenture.

Debenture holders have the right, by giving notice to the Trustee by no later than 5:00 p.m. (Toronto time) on December 30, 2019, to elect to convert their Debentures into Voting Shares at the conversion price in effect on the date of conversion in accordance with the terms of the Indenture. All non-converted Debentures will then be redeemed on the Redemption Date as described above.

Cargojet is Canada's leading provider of time sensitive premium overnight air cargo services and carries over 8,000,000 pounds of cargo weekly. Cargojet operates its network across North America each business night serving 15 major cities, and selected international destinations. Cargojet owns a fleet of 26 aircraft.

Non-IFRS Measures

"Adjusted EBITDA" and "Adjusted EBITDAR" are non-IFRS measures used by the Corporation to provide additional information on its financial and operating performance. Adjusted EBITDA and Adjusted EBITDAR are not recognized measures for financial statement presentation under Canadian IFRS, do not have standardized meanings and may not be comparable to similar measures presented by other public companies.

Adjusted EBITDA is used by the Corporation to assess earnings before interest, taxes, depreciation, amortization, gain or loss on disposal of capital assets, unrealized foreign exchange gains or losses, gain or loss on forward foreign exchange contracts, gain or loss on cash settled share based payment arrangement, loss on extinguishment of debt, employee pension, aircraft heavy maintenance expenditures, heavy maintenance deposits and non-cash pension expenses as these costs can vary significantly among airlines due to differences in the way airlines finance their aircraft and other assets. Adjusted EBITDAR is calculated as Adjusted EBITDA excluding aircraft rents. The Corporation believes that these alternative measures provide a more consistent basis to compare the performance of the Corporation between financial reporting periods. Adjusted EBITDA and Adjusted EBITDAR provide additional information to users of Management's Discussion and Analysis of Financial condition and Results of Operations ("MD&A") to enhance their understanding of the Corporation's financial performance.

Notice on Forward-Looking Statements:

Certain statements contained herein constitute "forward-looking statements". Forward-looking statements look into the future and provide an opinion as to the effect of certain events and trends on the business. Forward-looking statements may include words such as "plans," "intends," "anticipates," "should," "estimates," "expects," "believes," "indicates," "targeting," "suggests" and similar expressions. These forward-looking statements are based on current expectations and entail various risks and uncertainties and include statements about the Corporation's expectations regarding the Redemption, including the timing and benefits thereof. Forward-looking statements in this press release include, but are not limited to, the expected closing date and the anticipated benefits of the Redemption. Reference should be made to the issuer's most recent Annual Information Form filed with the Canadian securities regulators, and its most recent Annual Consolidated Financial Statements and Notes thereto and related MD&A, for a summary of major risks. Actual results may materially differ from expectations, if known and unknown risks or uncertainties affect our business, or if our estimates or assumptions prove inaccurate. The Corporation assumes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or any other reason, other than as required by applicable securities laws. In the event the Corporation does update any forward-looking statement, no inference should be made that the Corporation will make additional updates with respect to that statement, related matters, or any other forward-looking statement.